Drink price plan gets Chile response

IT'S a cheeky little number with a strong whiff of hot-blooded Latin pique and undertones of sour grapes.

Alex Salmond has received a direct letter of complaint from the government of Chile over his plans to raise the cost of alcohol through a minimum price, Scotland on Sunday can reveal.

Chile's ambassador to the UK Rafael Moreno wrote to the First MADVERTISEMENTinister earlier this month to warn that the SNP's plans would have "serious implications" for its burgeoning wine industry by increasing prices by up to £1.50 a bottle.

The world's fifth largest exporter of wine, Chile claims that Scotland's plans discriminate against southern hemisphere countries because their wines tend to be stronger, at more than 13 per cent alcohol.

Consequently, they would become more expensive than wines from Europe, such as German wine, where alcohol content can be as low as 10 per cent.

The SNP wants to impose a blanket minimum price on all alcohol, with figures of 40 to 50p per unit being proposed.

In his letter to Salmond, Moreno declares: "Based on a minimum price of 50p per unit, the implication of your government's proposal is that the Chilean wine would cost £1.50 per bottle more."

He warns that the plans "may have serious implications not only for Chile, but also for the industry and the consumers across the board."

Moreno also warns Salmond that his proposals could contravene free trade agreements. Chile signed a free trade agreement with the EU in 2003, allowing it to import wine into the continent without restriction.

The ambassador tells Salmond: "A minimum price per unit applied to all the wine industry may end in a barrier to free trade, particularly for those coming from the southern hemisphere, since its implications go beyond the original policy's target, the misuse of alcohol."

Moreno's warning appears to suggest that Chile will be just one country who may seek to block the minimum price plan if the SNP continues.

Others could include South Africa, Australia and Argentina, all of which would fall into the same category as Chile.

The government, however, insists it will pursue its policy, even though all three opposition parties – Labour, the Lib Dems and the Conservatives – have now said they will oppose it.

Last week, Chancellor Alistair Darling laid out his own proposals to cut back on cheap drink, pledging to raise the cost of cheap high-strength cider by as much as 2p per litre.

While Scotland itself is a relatively small market for Chile, the fear among exporters over the SNP plans is that, if they are pushed through here, they could be copied elsewhere across the world – in the same way that many countries copied Ireland's smoking ban.

A spokesman for the Wine and Spirits Trade Association said last night: "We have warned the Scottish Government about this from the start.

"It's a fact that wines from countries with hotter climates, such as Chile, South Africa, Australia and Argentina, tend to be stronger, so minimum pricing per unit will obviously discriminate against them."

However, a Scottish Government spokeswoman said: "Minimum pricing will not raise the price of all drinks, but rather will focus on 'pocket money' products such as high-strength supermarket white cider and lagers, which can be cheaper than bottled water.

"Like the recent comments from Whyte and Mackay, the concerns raised in this letter use a minimum price of 50p.

"The Scottish Government has never used 50p as indicative of what we would set a minimum price at – the example we have used is 40p.

"The First Minister will reply to the letter in due course."